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Fernandes and Tata: Bonding in Kuala Lumpur (Photo credit:Tata Sons)

Tony Fernandes’ dream of making air travel affordable for India’s cab drivers with budget airline AirAsia India seems to be heading for a turbulent take-off. The announcement by the Tata Group, a partner in Air Asia’s Indian venture, that it plans to establish a full-service carrier in a joint venture with has caused more than a flutter.

Arun Bhatia, the third partner in AirAsia India, said Friday that he wasn’t in the know and was “shocked” to hear the news of the Tata-SIA deal. He reportedly went on to term the move as “unethical”. Bhatia, who owns 21% of the new carrier and whose son Amit is married to steel tycoon Lakshmi Mittal’s daughter, has offered to buy out the Tatas’ 30% share in AirAsia India. He’s likely to raise the issue at the carrier’s next board meeting on September 28.

The Tatas have refuted the charge of a backdoor deal, saying that their talks with Singapore Airlines started around the same time that discussions on the joint venture with the Malaysian airline commenced and this was disclosed to AirAsia. Meantime, AirAsia India which has secured approval for its joint venture, has been preparing for a December take-off though final approvals for commencing operations are not yet in place.

" There will definitely be a conflict of interest between the two ventures, " said airline veteran Jitender Bhargava, a former executive director of state-owned carrier Air India and author of The Descent of Air India. " I would be surprised if Fernandes was unaware of the Tatas' discussions with Singapore Airlines."

While Bhatia has spoken his mind, Fernandes, the chief architect of the deal with Tata, has so far kept silent on the matter. In fact, over the weekend, Fernandes was busy hosting former group chairman Ratan Tata's visit to AirAsia's Kuala Lumpur headquarters from where he tweeted " Wonderful day with our partner and dear friend and legend. Lots of great ideas."

Intrigue and drama laced with accusations of conspiracy has long been a part of the aviation business in India that is heavily regulated by government. Often, rivals have a behind-the-scenes role to play. An AirAsia hand disclosed to me that a certain competitor was doing its utmost to delay their India launch. Airline tycoon Naresh Goyal, whose deal with Etihad Airways for his Jet Airways hit several air pockets before it was sealed, was himself accused in the past of causing Tatas’ earlier joint venture with SIA to unravel back in 2000.